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Trump Willing to End Iran War with Hormuz Closed
Breaking news overnight per the Wall Street Journal, Trump has reportedly told his aides that he’s willing to end the Iran war even if it means leaving the Strait of Hormuz closed.
According to the reporting, Trump’s preference is (1) negotiating an end to the war in exchange for the Iranians agreeing to fully reopen the strait. If that cannot be achieved, then his other options are (2) walking away and letting the Iranians decide what to do with the strait, (3) persuading the GCC nations and NATO to forcefully reopen the strait, or (4) forcefully reopening the strait with US forces.  While nothing is certain, the reporting suggests that Trump is at least entertaining (2).
So the big question is what happens to risk assets if (2) is the outcome. Our best guess is that risk assets would begin a slower, unenthusiastic recovery, because the Iranians would probably reopen the strait and charge a toll fee on adversary ships. A toll fee means oil starts to move again, just at a higher cost to the world.
Bitcoin: Short-Term Pain; Long-Term Opportunity
It’s two seemingly contradictory thoughts that are both true. In the short-term, prepare for Bitcoin to go lower. But in the long-term, this is a major buying opportunity.
Here’s why we should prepare for Bitcoin to go lower:
● Current Rising Wedge: These are bearish continuation patterns, and the current price action indicates that a break-down is imminent.
● Four Year Cycle: We’re continuing to rhyme with the last cycle both in terms of time and relative price action.
● Macro Outlook: Iran → Higher Oil → Higher Inflation → No Fed Cuts → Risk Assets Fall.
The reasons above are a mix of real-world triggers and a compelling narrative that has the force to send prices lower.  Now here’s why this is a major buying opportunity:
● A Fool’s Errand is trying to time the exact bottom in terms of price or time. We can have our theories and present data — but ultimately, no one knows.
● At or Close to Bottom: While no one knows the exact bottom, we can be fairly certain that we’re at or relatively close to a major macro bottom now. That’s what the market sentiment and the historical cycle data is telling us.
These two reasons remind me to do the opposite of the herd — to go against the fear emotions of my monkey brain. And by continuing to DCA through this bear market, then I’ll have done my best to “buy the bottom” and take advantage of this longer-term opportunity.
Google Says Quantum Resistance Needed by 2029
Now of course, the longer-term opportunity described above is only viable assuming Bitcoin doesn’t get hacked by a quantum computer.
So breaking news as of today, Google Research released a new whitepaper stating that the resources (i.e. quantum “qubits” and “gates”) needed to crack the encryption that protects Bitcoin and most other blockchains has dropped by an estimated 20X.
Google concluded that this resource reduction might allow quantum hackers to execute attacks in under ten minutes, which means Bitcoin transactions (i.e. pending coins in the mempool) would be vulnerable. So we’re talking dormant coins in old wallets. Bitcoin in transit. The whole enchilada.
Now assuming Google’s analysis is correct, it means Bitcoin developers need to get to work on solutions now. Understand that no coins or the blockchain itself is in any immediate danger (i.e. possible hacks are still years away), but the window for implementing a quantum-resistant fork is closing. Google is recommending that quantum-resistant updates should be implemented by 2029.
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